Kuwait, UAE follow US Federal Reserve with rate cut

0 Comments | AFP, January, 2008

KUWAIT CITY (AFP) — The Gulf states of Kuwait and United Arab Emirates on Thursday followed the United States and cut key lending rates by 50 basis points, moves which stoked fears of higher inflation.

The central bank in the UAE, which has the second largest economy in the oil-rich Gulf region, lowered its repurchase rate to three percent from 3.5 percent effective Thursday.

It still pegs the national currency, the dirham, to the US dollar despite mounting pressure for it to be revalued or pegged to a basket of currencies.

Kuwait, the only member of the six-member Gulf Cooperation Council states to peg its dinar to a basket of currencies, reduced its repo rate to 3.5 percent from four percent.

However, it maintained its benchmark interest rate at...